哈里斯势头猛涨、特朗普出席 NABJ、衰退担忧、中东局势升级、阿克曼推迟 IPO

Chamath Palihapitiya (00:00:00): How good do I look? I'm so sunkissed. David Sacks (00:00:02): How many buttons down are you? Chamath Palihapitiya (00:00:04): Oh my god. I have three buttons. David Sacks (00:00:06): Okay. Three buttons. Chamath Palihapitiya (00:00:07): No. I like, like, like, Speaker 3 (00:00:09): like, on, David Sacks (00:00:10): Is there a button below that we David Friedberg (00:00:12): can't see? There's no pants here. Just a bunch of things. David Sacks (00:00:17): Are you free buttoning and free balling in, or just both happening or what? Speaker 3 (00:00:26): David Sacks. And I said we open source it to the fans in a discovery. Love you. I see. David Friedberg (00:00:38): Hey, everybody. Welcome back to the All-In Pod. This week our host with the most, J Cal, is out with COVID, getting treated, spending the day in bed. We wish him well. We wish him a speedy recovery. We are gonna plow forward like all championship teams do. This week, I think we're gonna kick it off with a conversation about the election update. Obviously, Harris came out guns blazing in the media. The accolades seemed to be flying, and the polling data is starting to become worrisome. It seems for the Republicans. Just this week, Nate Silver released his newest model update, the Silver Bulletin, I think he's got it trademarked as nowadays. And in the model, he tries to estimate what does the polling data show us with respect to the Electoral College and the popular vote in the upcoming presidential election. Harris currently has a 42.5 percent probability of winning the Electoral College, Trump 56.9 percent, Kennedy coming in at 0 percent. On the popular vote, Harris has a 57.1 percent probability of winning the popular vote, 42.9 percent probability for Trump. I guess I'll start it off with David Sacks. Given the momentum coming out of the gate since the announcement of Harris as the Democratic nominee and this recent polling data, what's your read on the landscape today? What's your read on where we stand and what's ahead here? And what do you take away from these polls? David Sacks (00:02:16): Well, look, I think what happened is that Biden dropped out of the race. He abdicated, Harris took over, and it created a sense of euphoria on the part of the left because they thought they had a sure-fire loser with Biden, and they were right. And then once Harris replaced him, they thought, okay. Now we got a shot and we can fully unify and get behind this new candidate. So what you've seen is over the past couple of weeks, the mainstream media has gone all out on behalf of Kamala Harris. And, yes, this has led to a rise in the polls, but I think that the highs that Trump were at were always a little bit artificial in the sense that if the Democrats could field a candidate who could campaign, it was always gonna be a close election. Biden was artificially depressed in the polling because he just couldn't campaign. He could barely read from a prompter. He couldn't do interviews. So I think you're seeing the race normalizing. This is gonna be a close one. It's gonna be a nail biter. But I think the question about this honeymoon period that Harris has right now is whether it's sustainable. I mean, she has not done any press interviews, has not done any press conferences. She's not answered one question. She's not been asked one tough question by the media. She has only read from a teleprompter. She's only done scripted appearances. And yet, at the same time, she's basically been changing all of her policy positions and running from every position she ever stood for. So, for example, she said that she was in favor of single payer. Now she's against it. She said she was in favor of court packing. Now she's against it. She said she was against fracking. Now she's in favor of it. On the border, she said that we should consider abolishing ICE. Now all of a sudden, she's in favor of more funding for Border Patrol. On crime, she used to take kind of the BLM position that, you know, cops don't make us safer to now she's saying that she's a cop and prosecutor herself. She used to be in favor of federal gun buybacks. Now she's against them. David Sacks (00:04:24): It just goes on and on. I mean, in the 2020 riots, she raised money for the legal defense of rioters. Now she's distancing herself from those positions. My point is this is that after spending really her whole career staking out positions on the far left, she has now dropped all of these positions for political expediency. And the question is, what does she stand for at all? Does she just kind of blow with the wind and say whatever helps her win whatever the next election is? I mean, I think that's basically what's going on here. And normally, what happens is the press would ask you that question, but she's been getting a free pass because the mainstream media has basically been operating as a division of the DNC, and they're not holding her to account in any way. They're not requiring her to answer any questions. And as a result, yes, you're seeing this bounce in the polls, but I think the question is, can she sustain this for 100 days? Can she really get through the entire election? Without having gone through a primary, without ever having to explain her positions on issues. And she just does these short scripted appearances. I just think that at some point over the next 100 days, that approach is just gonna fall apart. She's gonna have to do a debate. She's gonna have to answer questions. At that point, I think the bloom will come off the rose a little bit here, and you'll see the polls normalize. David Friedberg (00:05:44): Do you think that J.D. Vance has negatively affected the interest in Trump that he, you know, there's a lot of media coverage about J.D. Vance being potentially the wrong pick for vice president and that he's creating more of a challenge for the president's campaign than a boon? David Sacks (00:06:02): No. Listen. Anyone who Trump chose was gonna be absolutely smeared by the other side and by the media. If it had been Doug Burgum, there would have been nonstop coverage of the six-week abortion bill that he signed. Right. You could go down the list. I mean, look, what Democrats will say is we just wanna see a moderate Republican, but when Mitt Romney ran, they were calling him a fascist. So the reality is that the mainstream media and the DNC, but I repeat myself, are gonna smear anyone who's picked. At the end of the day, I don't think that it matters. What matters is the top of the ticket. David Friedberg (00:06:35): Chamath, what do you think about the Harris campaign? How it's going and the momentum that is being projected in the media? And the polling data is clearly demonstrating an improvement over Biden's standings in the poll. Chamath Palihapitiya (00:06:47): I mean, I think we had Speaker 3 (00:06:48): a situation where one candidate was not real. And so Sacks is right that a lot Chamath Palihapitiya (00:06:48): of the polling up until basically last week is not really reliable. Speaker 3 (00:07:01): Now you have the snapback effect, which is more about a lot of people that were coming around to this idea of Chamath Palihapitiya (00:07:12): voting for Trump because Biden was Speaker 3 (00:07:14): such a bad option. Now flip-flopping. And so I Chamath Palihapitiya (00:07:14): think that's what explains the snapback. But Sacks is right. One hundred days is a really long time, and what Nate Silver's poll essentially shows is if she wants to win. Speaker 3 (00:07:33): Not the popular vote because at this point now, three or four Chamath Palihapitiya (00:07:33): elections in a row, that doesn't matter anymore. If you want to win the electoral college and be the president, you got to go and win five states. And in order to do that, you have to be very precise on about four or five specific issues. And in the absence of her defining herself on those four or five issues, she's not going to win. She'll win the popular vote, but again, when people win the popular vote and lose the electoral college, we've now gone through that enough times where that's just the fait accompli inside of American electoral politics. So I think that the Trump campaign and the Harris campaign need to agree on some schedule of debates. I hope that they do two and ideally three and that they both get after it in front of each other so that those five states that are really going to decide this election have an opportunity to make a decision on behalf of the rest of the country. David Friedberg (00:08:31): Yeah. Nick, if you pull that chart back up again, based on Nate Silver's model of polls where he takes all the polling data that's been collected by different third parties, he weights them based on the performance of those polls in terms of predictive power historically, and he creates this kind of macro model that's the Nate Silver approach here. He's estimating that within the 80 percent bound, every state on this list is up for grabs. As you can see, with the gray lines shown there, there's a very slight margin on the average in Wisconsin for Trump, in Michigan for Harris and Pennsylvania for Trump, in Nevada for Trump, in North Carolina for Trump, in Virginia for Harris, and so on, but each of those margins is so slim that there's still quite a lot of decision making ahead for voters. So pretty clearly on point that this is still very much an open election. I'll give you guys my read. I think that there are five camps of voters going into this when Biden was a candidate. The first is anything but Biden. The second is anything but Trump. The third is pro-Biden. The fourth is pro-Trump, and then the fifth is the other. And I think that that entire bucket of anything but Biden just became available once Biden dropped out of the race, and it was a pretty sizable bucket that there's a large number of voters out there that felt pretty strongly that Biden poses such a significant risk for leadership in this country because of the mental issues and the performance issues that we had seen that as much as people didn't love Trump, they were willing to vote for him because he's not Biden. And now that camp has an option, and that option is Harris. So some percentage of that camp, and I would say probably a super majority of that camp, is now switching into the Harris bucket. The pro-Trump bucket doesn't move. The pro-Biden bucket probably doesn't move. It sticks with Harris. And the anything but Trump bucket doesn't move. It sticks with Harris. David Friedberg (00:10:29): So, you know, the fact that there is probably such a sizable number of voters in the anything but Biden camp is what's probably helping Harris at this point and creates a bit of a handicap for Trump going into this last stretch of the campaign. That's my read because I know a lot of people at that point of view. David Sacks (00:10:45): That's an interesting point of view. And let me let me just respond to that for a second. So one of our critiques of Biden, not just in this election cycle, but Speaker 3 (00:10:54): probably going back a year, is that Biden had become basically a figurehead president, almost a David Sacks (00:10:54): construct, and he was fronting for a shadow cabinet or a group of powerful staffers who are really running the country, basically because of his cognitive decline. And we sort of joked that whoever the White House intern was, who was running the social media accounts, or the staffer who was running the teleprompter was basically the president because they could dictate what Biden said. Now I think the question to ask is, has anything changed? Kamala Harris refuses to do any interviews. She doesn't want to do any unscripted appearances. She's abandoned all of her policy positions that have been longstanding and were the reason why she ran for president in the first place in 2020. So the question to ask is, do we still have a construct as the president? I mean, the Biden staffers who are running Biden are now just running Harris. We don't know what she stands for. We don't have her appearing in unscripted natural appearances. We don't have her being challenged by the press. She's not willing to do what Trump did. Trump has walked into the lion's den yet again at the NABJ. Chamath Palihapitiya (00:12:07): National Association of Black David Sacks (00:12:09): You're right. Exactly. So walks into a very hostile interview at NABJ. Harris was supposed to come, and she didn't come. She would have gotten a very softball interview. She's not even willing to do that. I think that in substantive terms, I don't think that much has changed this election. The Biden staff is still running for president. I mean, that's what you're voting for. David Friedberg (00:12:28): I would disagree on this because I think in the last two weeks, what I've seen is statements coming out of the Harris camp that clearly distinguish her and her campaign from Biden's policy positions and Biden's campaign rhetoric historically. Speaker 3 (00:12:43): Most particularly, Sacks, is on Israel. When Netanyahu came to visit the United States, she David Friedberg (00:12:43): put out a very pro-Israel statement that we all know the Biden camp has largely avoided doing because of the concern over the pro- Speaker 3 (00:12:58): Palestinian rights movement's reaction, the Biden camp being pro-Israel. And the Harris David Friedberg (00:12:58): statement was pretty finely worded and pretty strongly worded that she is very much in favor of Israel defending itself. She acknowledged that there's a loss of Palestinian life that matters, and we need to acknowledge and address it. But she was very much in support of Israel, which is not a position we've seen in the Biden campaign. And I think that we're starting to see what, you know, what is a little bit more of a fracturing between Harris being allowed to be free and being allowed to have an opinion outside of the party line dictated by the Biden camp. And I think we'll probably see more of that in the next couple of weeks, and we'll probably see her starting to be a little bit more refined in what differentiates her from Biden, because I do think that's what's gonna allow her to win this election. And she's gonna stand up and say, Here's why I am not Joe Biden, and here's what makes me different from that individual. I respect him. I love him. He helped me, but let me tell you why I'm different and why that should matter. David Sacks (00:13:55): She snubbed Netanyahu, Friedberg. I don't know what you're talking about. She snubbed Netanyahu. Chamath Palihapitiya (00:13:59): I think you're an example of the people that want to give her the benefit of the doubt. Okay. I think there's a large faction David Friedberg (00:14:06): with those people. No. That's that's not a fair way to characterize me at all. I'm simply pointing out that she made a state I'm pointing out that she made a statement that's different than what Biden said. That's it. That's all I'm saying. David Sacks (00:14:17): Hold on a second. I think on Israel so first of all, she didn't write that statement. The staff did. Okay. Now what is the staff trying to accomplish on Israel? They actually have a genuine dilemma. On the whole Israel-Palestine issue Speaker 3 (00:14:28): because the Democratic Party is very much split on this. The Democrat David Sacks (00:14:28): establishment is pro-Israel, but the progressive base is very pro-Palestine. And even polling among Speaker 3 (00:14:39): youth shows significant support from Hamas even. And a lot of these people are very much within the the sort of hard-core left wing base of the Democrat party. So what the Biden David Sacks (00:14:39): administration has been doing and what I think Harris is continuing is a process of talking out of both sides of their mouth. Speaker 3 (00:14:57): Biden went to Israel, bear hug, Bibi, basically supported his policy, but then gave some lip service to the idea that he would limit the David Sacks (00:14:57): weapons that Israel is able to use. Harris pulls out this very pro-Israel statement, but then snubs Netanyahu at that speech you gave before Congress. Speaker 3 (00:15:14): So, look, the Democrats are trying to have it both ways. They have a David Sacks (00:15:14): base that is fractured on this issue, and so they're trying to thread that needle. Now you're right that let's just uplevel it. Let's move off the Israel issue for a second. There's no question that Harris wants to run from her record as being Biden's vice president. There's a good reason for that. The Biden-Harris administration is historically unpopular. What you have to ask, though, is whether it's credible. Harris suddenly is in favor of more money for Border Patrol. Why didn't she advocate for that when she was Biden's borders czar? The media is furiously scrubbing its websites for my, by the way. Speaker 3 (00:15:55): Hold on. David Sacks (00:15:55): They're removing historical references from during the Biden administration when she was openly called the borders czar. They're trying to memory-hole all that. So, look, I have no doubt that the Harris campaign wants to drop Speaker 3 (00:16:07): every substantive policy position she's ever taken because they just want her to be a construct. They just want people to be excited because. David Sacks (00:16:07): I do think that what you're saying is exact David Friedberg (00:16:19): what she needs to answer to in public in the next couple of weeks to earn credibility on what is she different from the Speaker 3 (00:16:24): Biden administration on in terms of policy? And why did she not make that clear when she was in the Biden administration? David Friedberg (00:16:24): And she can say, I didn't agree with it. Or she can say, I've changed my mind. And I think both of those might end up being where she needs to go to, but you're right. She doesn't need to answer to that. I don't think it's clear Chamath Palihapitiya (00:16:42): she has to do any of that. David Friedberg (00:16:44): You think she can just hide out and coast? Chamath Palihapitiya (00:16:46): No. Right now, the calculation is to get as many people to basically move into the not-Trump voting stance. Speaker 3 (00:16:54): And they're giving as much time as possible to measure that and see if it's a winning strategy. But again, and I think we Chamath Palihapitiya (00:16:55): just talked about this. Mathematically, it can win the popular vote, but it will not win the Electoral College. So she is going to have to appear and be in a position where she's confronted on about four or five key issues. And that's where this presidency is going to get decided. Four or five issues in four or five states, and we'll all know where she stands. On the border, on the economy, by the way, the problem is, and if you look at what's happening now, we are in a recessionary stance. There's going to be a lot of ink that gets spilled starting in September on the fact that because of a handful of companies, we're basically in a recession. So that's gonna have to get put on the feet of the sitting president and the sitting vice president. So there's a whole set of complicated issues. I think it's smart actually for her to strategically kind of stay quiet right now and just kind of see all the goodwill that's pent up to the not-Trump candidate is gonna flow her David Friedberg (00:17:50): way. Speaker 3 (00:18:02): Right. Chamath Palihapitiya (00:18:02): The problem is that that's not enough to sustain yourself for 100 days. And so she's just gonna have to take a point of view. David Sacks (00:18:09): Well, it might be if the press let her get away with it. Chamath Palihapitiya (00:18:11): No. Because I think, David, I think you're right. Because when you go into a debate or when you go into these places, people will want to know the answers to these questions. And if the media tries to memory-hole this thing, I think the thing that they most don't want, which is another Trump victory, will actually happen because of it. Because people will come in this kind of ambivalent group of folks that are, or independent group of folks that are looking for a very clear point of view on four or five issues, maybe it will come to a rally. And instead of that, they'll hear Megan Thee Stallion, and they'll wonder to themselves, well, this is not what I came for. I came to know where you stand on these four or five issues. So the media actually in order to give her the best chance of getting elected, and this is counterintuitive to them, which is why they probably won't do it, they'll have to confront her on these issues. David Friedberg (00:19:03): Yeah. I think that's fair. And that's why I invite Vice President Harris onto the All-In Podcast to join us for a conversation. I think we would all really enjoy that. And just to declare my position, I am in camp five, the other camp. I am not pro or anti either of these candidates. I obviously have issues that I think are far more existential to the longevity of the United States and the Republic that need to be addressed, that don't seem to be a priority for either candidate or either party. As I've mentioned many times on the show, that's where I stand. Let's move on. Sacks, I just want to ask, do you think that Trump is at risk of shooting himself in the foot by being too public, too open, and too engaging? If we take a look at what happened this week, the National Association of Black Journalists had a convention on Wednesday. It sent interview requests to both President Trump and Vice President Harris, and Trump accepted and went in person. Harris said she couldn't do it in person or via Zoom. And according to the National Association of Black Journalists, Harris is in talks to do a Q and A session with them at some point in September. There were two moments that are making a lot of news. One was the first question. Nick, can you play this where ABC's Rachel Scott went after Trump? Speaker 5 (00:20:09): A lot of people did not think it was appropriate for you to be here today. You have pushed false claims about some of your rivals, from Nikki Haley to former President Barack Obama, saying that they were not born in the United States, which is not true. You have told four congresswomen of color who were American citizens to go back to where they came from. You have used words like animal and rabid to describe Black district attorneys. You've attacked Black journalists, calling them a loser, saying the questions that they ask are, quote, stupid and racist. You've had dinner with a white supremacist at your Mar-a-Lago resort. So my question, sir, now that you are asking Black supporters to vote for you, why should Black voters trust you after you have used language like that? Speaker 6 (00:20:54): Well, first of all, I don't think I've ever been asked a question in such a horrible manner. First question. You don't even say hello. How are you? Are you with ABC? Because I think they're Speaker 3 (00:21:07): a fake Speaker 6 (00:21:08): news network, a terrible network. And I think it's a disgrace to all that I came here in good spirit. I love the Black population of this country. I've done so much for the Black population of this country, including employment, including opportunity zones with Senator Tim Scott of South Carolina, which is one of the greatest programs ever for Black workers and Black entrepreneurs. I've done so much. And, you know, when I say this, historically Black colleges and universities were out of money. They were stone-cold broke, and I saved them. And I gave them long-term financing, and nobody else was doing it. I think it's a very rude introduction. I don't know exactly why you would do something like that. And let me go a step further. I was invited here, and I was told my opponent, whether it was Biden or Kamala, I was told my opponent was going to be here. It turned out my opponent isn't here. You invited me under false pretenses, and then you said, you can't do it with Zoom. Well, you know, where's Zoom? She's gonna do it with Zoom, and she's not coming. And then you were half an hour late, just so we understand. I have too much respect for you to be late. They couldn't get their equipment working or something Speaker 3 (00:22:28): was wrong. I think it's a very nasty question. Speaker 6 (00:22:32): I have answered the question. David Friedberg (00:22:34): Sacks, is he shooting himself in the foot by agreeing to Speaker 3 (00:22:36): show up? He showed up David Friedberg (00:22:37): at the Bitcoin conference, which obviously went phenomenally well. But, Sacks, is he shooting himself in the foot by being too open and engaging too much? And should he lay low? David Sacks (00:22:46): No. I mean, look, what kind of president do you want? I mean, I want the president who is fearless and willing to walk into the lion's den over and over again and answer tough questions. What you saw in that sound bite here is that Rachel Scott, the interviewer, that whatever she was doing is not journalism. This is supposed to be a journalism association. Turned that interview into an ambush. It was hostile what she did and right out of the gate. I mean, the first question, she's attacking him, and he pushed back on it. I mean, I think you saw him push back on the media in a way that only Trump can do. Now you also heard there, I think, a really key point that Harris basically passed on the opportunity to attend when she was originally supposed to. That would have been Speaker 3 (00:23:27): a softball interview for her, but she is not willing to do any kind of interview right David Sacks (00:23:31): now. No questions, no unscripted appearances. She just wants to read from a teleprompter at that rally she did in Atlanta that had Megan Thee Stallion perform. So it was a free concert that drew out a huge number of people. Then Harris spoke for 17 minutes, and people were leaving five minutes in because they're just there for the concert. I guess the question that people need to ask, I understand why this is strategic for her. I mean, obviously, it's better for you if you don't have to take any positions whatsoever, and you can just abandon all of your previous positions without any explanation whatsoever. And the media gives you a free pass on that. I can understand why that's strategic, but I think that voters need to ask the question: Who do you want representing the United States right now in a world that's on fire? Who do you want to stand up to Putin or Xi or make peace with them? Who do you want to stand up to or be allies with Netanyahu? For example, the United States right now is in a very difficult situation. We can't have a teleprompter president. We need a strong president. I appreciate the fact that Trump is willing to take on all challengers. I just think it's manifestly clear that these are the qualities and traits you want in a president of the United States. David Friedberg (00:24:41): Okay. So your opinion is Trump needs to continue to engage openly and publicly. It shows strength and it shows a capacity to deal with adversity and conflict. Point taken. So, let's pull up the next split where Scott didn't ask Trump if Harris was a DEI candidate. And, here's his answer. Speaker 6 (00:25:00): I've known her Speaker 3 (00:25:01): a long time indirectly, not directly, very much. And she was Speaker 6 (00:25:01): always of Indian heritage, and she was only promoting Indian heritage. I didn't know she was Black until a number of years ago when she happened to turn Black, and now she wants to be known as Black. So I don't know. Is she Indian, or is she Black? Speaker 5 (00:25:20): She is always identified as a Black Speaker 3 (00:25:22): woman for the story of the Black Speaker 6 (00:25:23): I respect either one, but she obviously doesn't because she was Indian all the way. And then all of a sudden, she made a turn, and she became a Black person. Speaker 5 (00:25:33): Just to be clear, sir, do Speaker 6 (00:25:34): you believe that she's somebody should look into that too when you ask continue in a very hostile nasty tone. David Friedberg (00:25:40): Chamath, let me ask for your response. Did Trump shoot himself in the foot with that comment? And maybe you can give us your read on how he's doing with respect to this, you know, active engagement with, obviously, adverse. Let's call them, you know, journalists and interviews and forums. Chamath Palihapitiya (00:25:56): Well, I'd like to I'd like to hear from the Caucasians. What do you guys think about that? David Friedberg (00:26:00): Yeah. I'm not talking about the answer itself. I'm talking more about Trump getting out there and engaging in this way. Chamath Palihapitiya (00:26:06): Yeah. Here's what I will say. I think that from now until the end of time with social media tools replacing traditional media. And then with AI tools that are going to create enormous amounts of very sophisticated misinformation and disinformation, I think the only strategy for politicians from here on out Speaker 3 (00:26:34): is to leave zero ambiguity between what you think and what Chamath Palihapitiya (00:26:34): you say. And so without judging the quality of the answer, I think the thing that is going to be the most critical for people is to know that the person that you're voting for is in charge, and you get a great chance to vote this person up or down, and the more content that that person puts out directly, the less likely it is that this ambiguity exists that can then get exploited, whether it's by internal people inside of a country or whether it's by adversaries. And so my perspective is it's pretty fearless of somebody to just constantly say what they think. And, again, I'll just go back to what I said before with respect to the Harris campaign. I think that Americans were smart enough, and I think you did a good job of dissecting the electorate into five groups. Americans were smart enough Speaker 3 (00:27:30): to basically say never Biden because of the risk it Chamath Palihapitiya (00:27:30): represented to not know what one was voting for irrespective of whatever your historic allegiances were. I think they're smart enough now to demand answers to the four or five questions that really matter. And I think if Harris wants to really win this and give it a legitimate shot, she's gonna have to take a point of view on these five things, and she's gonna have to step into the lion's den and be asked very tough questions by a lot of different people. And she's going to have to leave no ambiguity that can be then exploited by misinformation and disinformation between now and the election. So, you know, that's honestly my reaction. Sacks, final word? David Sacks (00:28:15): Yeah. Look, I would say that in that clip and other clips from that event, I think you should pay a lot of attention to the audience's reaction. Because what did they do in that moment when Trump was supposedly committing a faux pas or getting into Dana's territory? They laughed. You know, when Mitt Romney spoke to this group a number of years ago when he was running for president, he got booed. Trump never got booed. He got a lot of laughter. There was a lot of appreciation. Why? Because Trump is always authentic. He's always who he is. Whereas Mitt Romney always appears to be scripted and frankly sort of patronizing. So I think the audience appreciated Trump for who he is. I think that when Trump goes into these areas, there's always a grain of truth to what he's saying. I think that Harris has leaned into different parts of our heritage for different audiences. But I do think that this is ground she should get off of. And I think a much better line of attack is to talk about the fact that she has brought all of her left-wing policy positions and refuses to answer questions or do unscripted appearances without having a teleprompter in front Speaker 3 (00:29:22): of her. David Sacks (00:29:22): I think that's a much better David Friedberg (00:29:23): Well, I agree. David Sacks (00:29:24): And I think that's what the campaign will be about from here. I, you know, I I don't I don't think we want this campaign to be about identity. David Friedberg (00:29:31): I do think that the Speaker 3 (00:29:33): rise of the authentic politician, the rise of the authentic CEO slash typically David Friedberg (00:29:33): founder, the rise of the authentic celebrity, is definitely the trend that we're seeing, which is that authenticity counts for more than anything regardless of one's position and, you know, obviously having Speaker 3 (00:29:49): a trust in in the individual is David Friedberg (00:29:49): rooted in the authentic capacity of the individual rather than the teleprompter CEO or the teleprompter politician or the teleprompter or buttoned-up or image-managed celebrity. And that's definitely been a trend that's been building over the last 10 years, culminating in a lot of these changes that we're now seeing. David Sacks (00:30:14): I mean, look, just think about just think about what's gonna happen over the next four years if Harris is elected. I mean, you're gonna have a prompter president. I mean, she's just never gonna be off prompter. It's gonna be like Biden at least tried to go off prompter. Whenever he did, it was a disaster. Speaker 3 (00:30:28): This is David Friedberg (00:30:29): one of the criticisms of a lot of hired large enterprise CEOs is that they come in. They have their all their words written for them by our media team. They have all of their communication script that managed. Every press interview is what the right journalists said in Speaker 3 (00:30:44): the right way. And the CEOs that seem to build the greatest value are those who David Friedberg (00:30:44): are typically founders because they're willing and able to be authentic because they weren't hired by the board. It's their business that they built. And so they're willing to be authentic. And the the CEOs who operate at scale with authenticity build the greatest market value. David Sacks (00:31:05): I agree with you that whether you're a CEO or you're a politician, authenticity counts, but I think this election is gonna be a test of what people want in their president. I mean, do you think the president needs to be a chief executive who at some level is calling the shots, or do you think it's good enough for the presidency to essentially be a construct and to be a manifestation of the staff. Speaker 3 (00:31:26): Right? And I think people I think I think voters David Sacks (00:31:26): look at policy, Sacks, and they look at character. And with respect to character, David Friedberg (00:31:35): there's a certain value that they ascribe to this authenticity component, which is typically lacking in most politicians, and Trump delivers that authentic component in how he talks and how he's off the cuff and so on. He's got other character issues, which I think hurt him. And on the policy side, people really kind of look at those objectively, those points. What's your what's your policy? And, you know, do I trust you as your character? David Sacks (00:31:59): Right. But see, I think it's more than that because I think any large organization needs a chief executive. What happens when you don't have a chief executive, or you don't have a strong chief executive? You get drift. The organization strategically drifts. David Friedberg (00:32:11): 100%. Yeah. It gets driven from Speaker 3 (00:32:13): the bottom instead of from the top. Yeah. The decisions that get made are the result of bureaucracy David Friedberg (00:32:13): and political fighting and staffers. Exactly. You Speaker 3 (00:32:17): need David Sacks (00:32:20): wanna control that. And I think it's really interesting that when Biden was still the candidate, but everyone could tell that he was sort of impaired, that the arguments you started hearing from Democrat partisans and the media is that, well, you're voting for a team. You're not just voting for a president. Right? You're voting for a shadow cabinet. Exactly the thing that we criticize on this pod for the last year. My point is that you're still voting for a shadow cabinet unless Harris is willing to get out there and answer questions and be unscripted. You're just voting for a staff. And I don't think that's good enough. When we're in a world where we're in a proxy war with Russia, and we could be in a war with China, and we have these problems in the Middle East, I want a decider. I want to know that the buck stops here, not the buck stops wherever. David Friedberg (00:33:07): Let's shift topics. I'd like to talk about what's been, I think, a lot of chatter amongst friends of ours who are active in the market that at a policy meeting on Wednesday, the Fed held rates steady. Jerome Powell said, quote, a reduction in our policy rate could be on the table in September if inflation continues to fall. He said we're getting closer to the point at which it'll be appropriate to reduce our policy rate, but we're not quite at that point. The next Fed meeting where this rate cut could happen is September 17 and 18. And if you look at the futures markets today, the market is now estimating a 20% probability of a 50-basis-point rate Speaker 3 (00:33:50): cut in the September meeting, 80% probability of David Friedberg (00:33:55): a 25 bp rate cut, and basically no probability of no rate cut anymore in September. Chamath, is that your read on where we're at and, you know, is the Fed kind of appropriately reading the economic tea leaves? Given the recessionary indicators that you just mentioned earlier and what else we're seeing that the Fed's mandate obviously is meant to support both the monetary policy, but also employment in this country. Chamath Palihapitiya (00:34:23): I think we're in a recession. And I think the problem with a recession is even as inflation diminishes, if your purchasing power is shrinking faster than prices fall, it still feels like prices are going up. I don't know if you guys have been reading the Wall Street Journal, but, like, the last couple of days, they've been doing a whole series on people that have been left behind by inflation. And I was really surprised as I read those articles, just the sheer quantity of impact in terms of the number of people it's touching independent of salary. And so my takeaway kind of just reinforced the fact that we've sort of, like, looked past the problem because of the stock market going up for the last few quarters because of 7 companies. And now that people are sobering up to the reality that even they don't have an answer for all the money they're spending, the stock market's down, exit those 7 businesses, and I think that you're gonna start to see some real pain in the fall. So Jerome Powell is probably gonna cut 25 and and he and and I think that if they get to him, they'll try to cut 50. But the problem is it won't solve the problem. And I think if this is again where Kamala Harris has to be she's gonna have to make a very difficult calculation here, which is she's going to have to throw Joe Biden and then the economic team in the White House under the bus here and say that was them. Yes. They screwed it up. It was against my wishes. And here's my vision for how we fix this because otherwise, the Republicans will be all over it. And I think if you have a bad economy like what it looks like going into November, it's gonna be very difficult for the Democrats to win the White House. David Friedberg (00:36:03): Well, without bringing it back to politics, Sacks, economy good or bad, and is Jerome Powell gonna cut rates 25 bps, 50 bps. Do you agree with what the market's forecasting? David Sacks (00:36:11): I guess what I would say about the economy is that in nominal terms, we're not in a recession according to the data that's come out. The Q2 GDP was roughly 2% GDP growth. However, I think there's a couple of problems. One is that what we've seen over the past year or so is that the economic data that comes out keeps getting reforecast down. So they put out a provisional number or an estimate. And then when they finalize the number three months or six months later, it always seems to go in one direction. We've seen this over and over again with new jobs being reforecast down, and we saw this with the Q1 GDP where initially they're reporting think it was, like, a 1.8% number, and then it got restated down to 1.3%. So the Q2 GDP number was around 2%. It was good, but, again, it's a provisional number, and let's see where it actually ends up. The bigger problem is government spending. The deficit is running at 6% of GDP, whereas economic growth is at, let's call it, charitably 2%. Well, government spending is included in GDP. So if you were to balance the budget, let's say that you were to make government live within its means and not have a deficit, we'd have negative 4% GDP growth. So the only reason why we're in positive GDP growth territory is because of massive government spending that we know is not sustainable. And at some point, the bill is gonna come due for that. So I have to say that you asked me, is this a good economy? I mean, it's not the worst, but there's definitely unsustainable things propping it up. And I do think that the bill will come due at some point for this. David Friedberg (00:37:58): It's not just fully supported. It's overly supported. By the federal government in the United States. And I mentioned this last week, federal government spending is over 2x, the sum of all state spending, federal government spending into the next year with the Biden budget proposal, $7,300,000,000,000. That's like 30% of GDP. And I think you guys may remember this analysis I pulled together a couple of months ago where I estimate something close to 30% of U.S. employment is either direct government employment or indirect government employment through government payments to third parties that are employing those individuals. So the government is becoming an integral part of maintaining the flow of dollars in the economy because they are such an integral buyer and seller within the economy and an integral employer within the economy. And so to reverse that trend is what I worry about more than anything, as I've shared many times, which is why I question whether either political candidate actually solves this problem for us, and we're almost like, you know, arguing over which marbles I get while the Titanic is sinking. There is a real fundamental issue with how this economy is structured. I will tell you anecdotally, I have a lot of conversations with folks that work in the agriculture industry, in the food industry, in the industrial industry, many of these industries that have a very different capital flow cycle than we all deal with typically in Silicon Valley and software, and many of them are struggling. these are businesses where some folks have told me orders completely fell off a cliff in capital equipment that some small business owners that sell whatever pieces of equipment you want to come up with, they are not getting orders. There's no revenue. There is massive oversupply and under purchasing happening in the food and ag markets, and yet folks are still trying to push up prices in order to make the debt payments that they have to make on their high-interest debt now. And that creates a crippling condition for them. Across the economy, I think there are the haves and the have-nots as is indicated in this article that was just pulled up where there are some parts of the economy where you have low debt, high-margin businesses, that can continue to scale and continue to raise pricing, have a lot of elasticity in pricing. David Friedberg (00:40:06): And then there are the others that operate on, you know, 1 percent interest rate charges. The changes drive their profit or loss for the year in a pretty meaningful way. And that's the part of the economy that's really suffering. And, unfortunately, the action that will be taken to resolve this isn't necessarily a free market action. It's going to end up being some sort of government intervention, which furthers the government's involvement in the economy and furthers the tentacles that make it much harder to ultimately pull out of this spiral and this problem. That's my rant on this whole point. But David Sacks (00:40:37): Yeah. No. I agree with that. I agree with all that. I've seen some reports that a crazy percentage of the job creation over the past year has been government jobs. David Friedberg (00:40:46): All of it, more than 100%. So, basically, there has been a net loss in private market jobs, net of the effect of government employment, or government spending on companies that then use those dollars to go hire people. Let's talk about the impact on the market. So you know, as a result of this, this rate cut announcement or this rate cut indication, markets have rallied a little bit, but, you know, to Chamath's point, there are definitely, you know, the haves and have-nots. AMD beat. They were up 4% after hours on, you know, improved AI chip sales. The revenue was $5.8 billion, up 9% year over year. Microsoft had so-so results. Nvidia jumped 12% on some comments made by Meta and Microsoft that both said that there's increased AI demand, and they're gonna continue to build out capacity. So, Chamath, I know you've talked a lot about this in the past. Maybe you can give us your read on the comments that were made this week. You've historically said that a lot of this build out is well ahead and there's no real ROI yet, but clearly some of the buyers of this capital equipment are saying, hey, there is ROI. We're gonna continue to build aggressively. So maybe you can share a little bit on if anything is different, or are we just kind of seeing folks justify with the decision statement? Chamath Palihapitiya (00:41:59): I mean, sadly, this is another case of sell the news. These things rallied phantomly in the after hours. And if you look at them, they've all just given back every dollar of gains. So I think that people know that we're sort of at the tail end of the hype cycle on AI. And every time these things spike, people take an opportunity to just massively sell. I mean, Nvidia has turned over 308 million shares today. David Friedberg (00:42:30): That's crazy. It's literally trading of the day. It's trading like a penny stock. Chamath Palihapitiya (00:42:35): It's going straight down like a lead balloon. Yeah. Meta rallied. They've basically given up all of their gains. It's gone kind of straight down today. But the point isn't that these companies are going to zero. That's not the case. It's just the point is that right now, people are optimizing. They're selling every chance they get to kind of book the profits. And I think that that's fair because, you know, at some point, nobody knows when all of this phantom money is gonna show up. David Friedberg (00:43:02): Right. So this is independent of what we would call the economy, independent of the recessionary conversation and the rate conversation we just had. Chamath Palihapitiya (00:43:10): Look. I mean, I'm in the middle of this right now with 80/90. It's been one of the joys of my career to actually start a company in the middle of what I think is the most important wave that I've ever seen professionally since social networking, and I jumped into the middle of that wave and I kind of tried to ride the best wave I could there. I'm doing it here, but my honest takeaway after being in this thing now for, you know, seven months intensely, and I'll be into it for as many years as it takes to build a successful company, is that AI is massively deflationary. It takes not that much money, and the results are really meaningful in terms of the amount of efficiency that you can capture and the cost that you can save. And the right business people, i.e., startups that are starting from scratch, like myself and my co-founders at 80/90, we will pass that on to our customers because it allows us to differentially price versus incumbent solutions. And so I don't see a path where all of a sudden, a multiple of the money that's been spent shows up. I don't see—I do see a path where companies find tremendous. If I think about it this way, if you looked in the 1980s and said, what is the most profitable operational company that existed in the '80s? I don't know what that company was, but I suspect that their EBITDA margins were roughly in the 30 or 40 percent range, and it was probably incredible. If you fast-forward now 40 years, the most efficient company is probably sort of 50 or 60 percent EBITDA margins. Speaker 3 (00:44:50): The reality is that the best AI-enabled company will probably have margins that are 70-80 percent in the next 15 or 20 Chamath Palihapitiya (00:44:56): years. Now that's an incredible thing. David Friedberg (00:45:03): That's a big prediction, Chamath Palihapitiya (00:45:04): but that will again spur the principal law of capitalism that everybody keeps forgetting, which is you compete out excess return. And so while you will have many companies that have, you know, 60-plus percent operating margins, they'll be in much smaller markets. And there'll be 1,000 and 1,000 and 1,000 of them. So I suspect what happens is that the overall market grows, but the number of companies grows by an even larger order of magnitude. And in all of that, the reality is that it's gonna be very hard for these big folks to sort of see this value capture that makes any of this investment worthwhile. So I think that you're gonna have to have some sort of reset in terms of the capital that's happened here. David Friedberg (00:45:46): I want to switch gears yet again and talk about the assassination of Ismail. I hope I pronounced that right. He was killed by a bomb while staying in a guest house in Tehran according to the New York Times. Earlier reports indicated that he was in fact killed by a missile strike from Israel. But just this morning, the New York Times reported that the guest house where he stayed is run and protected by the Islamic Revolutionary Guard Corps and is part of a large compound known as Niavaran in an upscale neighborhood of northern Tehran. And the article in the New York Times goes on to report that according to several Middle Eastern sources, a bomb, a remotely detonated bomb, was actually planted in this guest house over two months ago, in anticipation of the Hamas leader's stay in this guest house, and it was then set off once he actually stayed in the guest house. This obviously represents kind of an incredible feat in operational capacity and intelligence. I think we've known and talked a lot about, and the media has kind of covered quite a bit about the capacity on the Mossad side. But I just want to kind of get your guys' reaction to this. I think that there's a bigger and important story here about the strength of Israel's intelligence and military capacity in the region and what that could mean for their posturing and their demands and their activity in the region in the months and years ahead, particularly with Netanyahu still in charge. So, Sacks, maybe you can kick us off with your thoughts on this article and Mossad's role in the assassination of this Hamas leader. David Sacks (00:47:25): Well, there's no question that the Mossad established or reestablished its reputation for extreme competence here, being able to infiltrate Iran in order to assassinate the top political leader of Hamas while Haniyeh was a guest of Iran, I mean, that's deeply humiliating to Iran. I think he was there, Haniyeh was, for the swearing in of the new president of Iran. So for them to be able to target him while he was there and set the bomb months in advance, I mean, that shows extraordinary planning and intelligence and a huge failure on the part of Iran. I think in terms of the larger significance of this, you know, in the wake of October 7, on this pod, I said that I hope that Israel did not go off half-cocked responding the way that the United States did after 9/11. And when they started bombing Gaza, I said this is gonna backfire. And, you know, boy, was that an understatement in terms of the reaction of world opinion. I mean, Israel went into Gaza, basically leveled the place, and has alienated practically the entire world. The only country that’s solidly with Israel anymore is the United States. And even within the United States, roughly half the people are now against Israel. And I think what I said at the time was that Israel could pursue or should pursue a more targeted strategy the way that it did after the Munich Olympics. This assassination within Iran shows that the Munich Olympic strategy, I mean, they basically shown that it's successful. They've been able to do it. I wish they had limited their response in this more targeted way because I think that the destruction of Gaza has created tremendous humanitarian suffering, and it's alienated just about the whole world. And what has it accomplished? I don't think they've gotten rid of Hamas. They have not been able to kill the military leader of Hamas, which is Sinwar, who was the actual military planner of the October 7 attack, and they have radicalized. Whatever part of the Palestinian population was not radicalized has been radicalized. And they've turned so much of the Middle East and the world against them in such a strong way that, again, I wish that they had pursued the more measured strategy. Still a tough strategy. I mean David Friedberg (00:49:45): Let me put you in Netanyahu's seat. You are leading Israel. Hamas comes into your country, attacks, kills lots of people. What is your measured response to that attack from Hamas given the capacity you have? The Israeli Air Force, by the way, is second only to the United States, just to give you some statistics. The Israeli Air Force has 90,000 active and reserve personnel and 614 aircraft. Israel is reported to have up to 400 nuclear weapons, and they have this extraordinary technical capacity with Mossad and operational capacity that is kind of unrivaled pretty much anywhere in the world it seems. What do you do if you're sitting in Netanyahu's seat that provides a more kind of measured response? And how do you kind of, you know, lead your nation? David Sacks (00:50:35): Well, first of all, I'm not obviously sitting in that seat. I don't live in Israel, and I don't have skin in the game that way. So I think the first thing that they would say is, you know, you're not us. You're not sitting here dealing with all of our enemies in the region, and they would have a point. But what I advocated, I think, months ago, was to take a more targeted, measured strategy that I think the assassination of Haniyeh shows that they could have executed. And I understand why they went into Gaza and why they felt they needed to go into Gaza, but I just this is not an anti-Israel statement. It's just a questioning of the strategy. I just don't see that it's produced much good. I don't think they've solved their Hamas problem. They have not gotten some war, and they've lost a meaningful amount of global support. David Friedberg (00:51:19): Now, Chamath, do you want to read? Chamath Palihapitiya (00:51:21): I think that it was in hindsight a pretty big miscalculation by Netanyahu to pursue the strategy that they did. And I would have much preferred what you're seeing now, which is a very targeted approach. I think it preserves and it would have preserved not just world political support, but just individual people support where instead of going into Gaza, leveling the place, creating all of this death and destruction and amplifying and confusing, people where they now all of a sudden had to make a decision between these two groups and now get confused with anti-Semitic sentiment. That should never have happened. It's clear that Mossad is incredibly competent and incredibly capable. Speaker 3 (00:52:12): I do believe that sovereign countries have the right to defend themselves, but then there was a bridge too far. And I think Chamath Palihapitiya (00:52:23): the Israeli government has crossed it. In hindsight, and I think I told you the story, and I may have relayed this in confidence, but I'll just say it again. On October 8, what was offered, and I'm not gonna say by who, was sort of a meeting of the right political leadership from the Middle East, Israel, and the United States, where they were all willing to sort of come. And the idea would have been to extend some sort of structured solution for the Palestinian people. Now that would have been so unintuitive and unexpected. I think everybody would have been a little bit on their heels, but I think what it would have done is it would have cast Netanyahu in an incredible light. It would have cast Israel in an incredible light. They would have still preserved the ability to go and kill the individual leaders that they wanted to, but it was rejected. And I think that when we look back, these are the kinds of decisions that, hopefully, history documents accurately so that folks who are in the seat, to your point, Friedberg, the next time around can make a different calculation. I see the pictures and there's just no way that you can turn them off. You know what I mean? David Friedberg (00:53:42): I think Israel's biggest asset is probably also their biggest liability, which is their military and intelligence strength. And it emboldens them in a way that they Speaker 3 (00:53:52): can be more aggressive than perhaps they need to be with respect to maintaining the David Friedberg (00:53:52): security of the state, but perhaps being vengeful and vindictive. And I know that that's a very controversial statement to be made. I want to underscore the strength of this military and this intelligence. Do you guys remember that Stuxnet worm from a number of years ago? That story was incredible. And then the New York Times broke this story in 2012. Stuxnet was a malicious computer worm, and I'm reading off of Wikipedia because there's a lot of reporting that has different opinions on this that was first uncovered in 2010 and was thought to have been in development since at least 2005. Now, this computer worm was supposedly developed by Mossad and the NSA, and it was a malicious computer worm that ultimately allowed intrusion into the control systems of the centrifuges of Iran's uranium refining systems. And they basically were then able to make those centrifuges go haywire and destroy themselves, and they did this over and over for several years, and the Iranians could not figure out what was going on or why. They kept it completely secret. Ultimately, it was revealed that there was this operation organized by the United States called Operation Olympic Games that was designed for disruption operation, and that Mossad had a critical role in. By the way, there Chamath Palihapitiya (00:55:11): are there are two other stories that build on top of this. They're that are tangential but related. One is that there was a nuclear engineer that Israel felt should be unlit. And the way that they did it was via some, like, remote control machine gun that they planted off of, like, a highway where the car egress off the highway, and then all of a sudden the thing was shot up. A different example was there's a story about how they figured out that Yasser Arafat was sick because they were able to collect a stool sample from a pipe that left his home, and they were able to kind of diagnose that a, it was his stool, and then b, he had some chronic illness. My point, I think, in all of this is kind of where you're going, which is that when you have such capability and such precision, Speaker 3 (00:56:00): to Chamath Palihapitiya (00:56:01): go to the other end of the spectrum, you really have to be sure that you're right. And, you know, as Sacks said, I think we're looking back, and it's clear that the support around the world, it just isn't there for that kind of mass casualty and that kind of like David Sacks (00:56:16): If Israel could actually destroy Hamas and achieve its military objective in Gaza, that'd be one thing. But I think we've seen that that's impossible. I mean, Hamas basically bleeds in with the population. It's indistinguishable, and the leadership is hidden deep underground and the Israelis have not been able to root them out, and an end to the war has not been found. And so you've destroyed Gaza, but you have not achieved your objective of eliminating Hamas. And in the process, you've deeply alienated David Friedberg (00:56:45): No. I mean, it's just David Sacks (00:56:46): it's just like And you made a situation worse, basically. David Friedberg (00:56:49): It's like the Russians and the Americans trying to chase the Taliban in Afghanistan forever. This is not a group of individuals that once they're gone, everything is fixed. David Sacks (00:56:59): Everything's just worse. I mean, you still have the same problem. In fact, now the entire Palestinian population's radicalized. In fact, the whole Arabic Muslim population in the Middle East is more radicalized against you than they were before. I mean, I know there was already a significant amount of hatred, but now it's worse. And you haven't formally solved the underlying issue. I think the 9/11 analogy is apt. I mean, we went off after 9/11, half-cocked into all these wars in the Middle East. I think that going into Afghanistan, I think you could say that was justified because they were harboring Al Qaeda. But then we went and tried Iraq because, really, members of the Bush administration had a pre-existing agenda, and then they lied us into it saying that Saddam was connected somehow to 9/11. And we began a 20-year process of just plunging ourselves into all these wars. It only made everything worse. You know, one of the reasons why Iran is in such a strong position today in the Middle East is because we took out Iraq. We basically created a power vacuum in the Middle East that they ended up filling. David Friedberg (00:58:01): I recently heard that after Israel struck the embassy in Damascus a few months ago, you may remember this. Iran launched a counterattack. And do you remember there were all these, like, drones that they sent, hundreds of them, into Israel? But there was supposedly a forewarning that these drones were on the way. There was notice given, and it was like, this is it. This is our proportional response, and we're done. Chamath Palihapitiya (00:58:28): That's right. That's right. David Friedberg (00:58:30): What I heard was that Netanyahu did not want to stop. He wanted to escalate after that response from Iran. Now that, coupled with Speaker 3 (00:58:40): what's going on in the West Bank right now where there is Chamath Palihapitiya (00:58:41): a restricted movement of Palestinians within the West Bank, David Friedberg (00:58:49): and continued development of Jewish settlements, I think really represents a major risk to the Middle East region. We could see an escalation beyond Speaker 3 (00:58:59): the response that may be mandated or necessary David Friedberg (00:58:59): to secure the state. That makes things much, much worse in the region and could isolate Israel even further and ultimately draw a lot of powers to that region to try and figure out what side you are on and how do we resolve this? And that could lead to something much bigger and much nastier. So I think while we all observe this and watch this, the behavior of the targeted attack in Hamas, for me, it's not the issue as much as indicating the capacity of this military misintelligence. That means that they probably feel highly emboldened to take whatever steps individuals feel are necessary to secure the state for the long run, which could mean an increased escalation in conflict. And that's, I think, a real point of concern, and that's one of the black swan events I think that's still outstanding right now. Because if that does happen, if there is, for example, an unraveling of the West Bank, you could see one of these sorts of events that everyone gets wrong like a magnet to them in the least, and you end up with a major global conflict that becomes a problem for markets. It becomes a problem for the world. And that could be the catalyzing event that I don't think any of us want to see. Chamath Palihapitiya (01:00:15): To use your logic from before, the thing that Speaker 3 (01:00:19): may plunge the world into having to have a point of view on this may actually be a political calculus that Netanyahu has Chamath Palihapitiya (01:00:20): to engage in, which is around keeping small factions of his coalition government in place, may not actually represent the full view of the Israeli people. That's what's even more tragic. So it's not obviously the Palestinians don't want it, but many Israelis may not want it either, and there may be no avenue if he wants to remain in power. And that's what's so scary. David Sacks (01:00:44): Look, I think there's no question that we're on a path here where we Speaker 3 (01:00:47): could have a regional war in the Middle East. Remember that after David Sacks (01:00:47): Israel hit the Iranian general in Lebanon, the Iranians responded two weeks later with that massive drone and Speaker 3 (01:01:00): missile attack. Most of the missiles were intercepted by Iron Dome, and I think America participated in that as well. I think one or two of them got through. David Sacks (01:01:11): And then Israel launched kind of a weak missile attack on Iran, and that was kind of the final word on it. There were people in Netanyahu's cabinet, like Smotrich and Ben Gvir, sort of the more hardline radical right-wingers, who I think publicly tweeted that they thought Israel's final word on it was weak, and they clearly wanted to do more. So I think the point is just that when we had this last exchange between Israel and Iran, it felt like it was on the verge of tipping over into a regional war, but Speaker 3 (01:01:41): I think partly due to the efforts of the United States, we were able to help tamp that down. I think now Iran's promising David Sacks (01:01:42): revenge for what just happened in Tehran. And this could set that escalatory spiral off again. Chamath Palihapitiya (01:01:58): Totally. David Sacks (01:01:58): If you were to place odds on this, I'd say it's at least 50-50 that things escalate into a It's not as much of a black spot. Yeah. David Friedberg (01:02:06): By the way, there's no such thing as a regional one in the Middle East because every one of those countries has significant allies in Russia, in the United States, in China. What is Saudi Arabia gonna do? You know, Jordan is gonna end up in a situation where they may end up having to defend the Palestinians and the West Bank, which puts them across the shooting field from the Israelis, and the United States is an ally to both Israel and Jordan. What are we gonna end up doing? And that's why this whole... that's why this whole situation is not just about a regional conflict. It actually crosses the whole world back to the Middle East, and this is a real kind of escalator here. Chamath Palihapitiya (01:02:42): This is why the counterfactual of what could have happened on October 8 is so important because that would have been UAE... Speaker 3 (01:02:47): United States, Saudi. That's how it was involved with it. Chamath Palihapitiya (01:02:48): No. Just those four. And let's put Qatar in the mix as well. But my point is, like, my gosh, like, that it could have rewritten world history in such a profound way. It would have just taken some restraint and proportionality. David Friedberg (01:03:10): Turn the other cheek, kind of. David Sacks (01:03:11): Yeah. It would require incredible forbearance on the part of a population that had just been attacked. Attacked and attacked and attacked. Atrocities on civilians. David Friedberg (01:03:21): But not just not just this attack. Like, under attack for... Speaker 3 (01:03:24): generations in a region that has been all about conflict and secularity and all of the kind of, you know, identity drivers that make... David Friedberg (01:03:24): this so deeply personal and rooted in history, not just in a moment or an event. David Sacks (01:03:38): Look, when it happened to us on 9/11, we lashed out. You know? Yeah. Exactly. But the results were not good. David Friedberg (01:03:43): Yeah. Well, look, let's move on. I'm not trying to judge anyone's behavior. I'm just trying to shine a light on the strength of Israel's capacity and what that may mean for their proclivity for escalatory behavior, which is really scary given that this is not just a regional issue. It becomes a global issue when it does happen. Sorry. Go ahead. Chamath Palihapitiya (01:04:01): I thought you were going somewhere else with it, which is I was just gonna say in any other simulation, the capability of the Mossad is fodder for incredible movies. Like, it's out of a movie. Right. You read these articles and they just don't seem like they're real. David Friedberg (01:04:18): Incredible. It's Chamath Palihapitiya (01:04:18): like, what do you mean? You smuggle the bomb into the safe house in Iran where all the VIPs stay. David Friedberg (01:04:25): Two months ago. Two months ago. Chamath Palihapitiya (01:04:27): Two months ago. How does that happen? What does it mean that you actually developed? Yeah. Then sit tight. What does it mean that you developed a virus that you were able to get into the actual working computers of the Iranian David Friedberg (01:04:39): control units. I mean, the control units. Yeah. The control the control boards. Which we said made by Siemens of the equipment made by Siemens that we should do Iran. Yeah. Chamath Palihapitiya (01:04:49): Like that's not that's not like you telnet into some You know what I mean? Like, that means that there was a person physically there that then found a way to essentially get this firmware implanted. And it's like No. David Friedberg (01:05:00): You know what happened? I remember the story. They actually did not What happened was they let the virus circulate in the world for years before someone randomly Speaker 3 (01:05:11): had it on a USB drive that didn't know they had it, randomly plugged it into a computer in the centralized facility, then it infected, David Friedberg (01:05:11): sent out a notice, "I'm in here." And then after years, it was finally in there through the random movement of this virus that no one isn't that incredible? Anyway, yeah. Well, let's wrap up with the Bill Ackman story. David Sacks (01:05:30): Sorry. Before you do that. Yep. Hate to make this political, but I just have to observe. I mean, look at this situation in the world. I mean, the Middle East is on the verge of regional war. We could be in a war there. I should say there could be a regional war there by January 20 when the next president is sworn in. You've got the United States in a proxy war with Ukraine. You have major tensions with China Speaker 3 (01:05:50): in East Asia. David Sacks (01:05:50): I mean, is this Speaker 3 (01:05:50): really the time where you wanna put David Sacks (01:05:50): in place an inexperienced president? Whose policy positions are unclear, who's untested? Was never even tested by a primary, who the media refuses to test now, who's basically a media construct. This seems to me like a really bad idea. David Friedberg (01:06:11): Alright. So political pitch in for from David Sacks. We don't have JCal here to give the other side, but let's keep going. Bill Ackman's with her on his plans to IPO pushing Square. You know, tomorrow, do you wanna just give us kind of the background on what he was trying to do? And, obviously, this was an attempted $25 billion raise as an IPO. He recently reduced the raised target to $2 billion. And when the order book came in, I believe it was less than $1 billion, he scrapped the plans entirely and just announced yesterday that he's pulling the IPO. So can you just explain a little bit about what this IPO was and then we'll talk a little bit about why we think it fell apart. Chamath Palihapitiya (01:06:46): I can only repeat what I read, but I'll try to kind of, like, translate it into non-Wall Street speak. So, basically, he has a company, but what that company does is it gets investors to give it slash him money, and then they invest it in all kinds of things that they deem worthwhile. It could be bonds. It could be stocks. It could be currencies. It could be derivatives. They generate a return, and then they give those returns back to their investors. So that is a hedge fund. Speaker 3 (01:07:15): The Holy Grail has always been trying to figure out how can those funds are those funds are raised and distributed back. Right? I mean, Chamath Palihapitiya (01:07:16): I think you David Friedberg (01:07:25): Exactly. I don't mean to interrupt you. Yeah. But just go ahead and say that. Chamath Palihapitiya (01:07:28): Yeah. But the Holy Grail for someone who runs those businesses is when they realize, well, listen. I get paid a great profit share from those funds when I'm successful. I'm I'm also allowed to take a 2% per year management fee. But I believe I'm building equity. And can I get somebody else Speaker 3 (01:07:46): to recognize the fact that I'm building equity? And that's no different than a startup. Chamath Palihapitiya (01:07:46): Right? So, you know, Friedberg, you're building a hollow. You believe that you're building all kinds of really interesting things rooted in science, and you want other people to judge the value of that as measured by your equity, right, independent of your revenues and profits today. They want to project into the future. The problem is that hedge funds have not found a very elegant way to demonstrate that they have any equity value. And there's only been a few, and the formula has been the same. So companies like Blackstone, companies like KKR, companies like Apollo, what have they proven? They've proven that they can raise enormous amounts of money. So most of these organizations now are approaching $1 trillion of capital raised, and they tell investors, well, look, don't worry about the returns anymore, worry about the 2% because that's like our revenue. And we're generating $20 billion a year of revenue. That'll grow at some ratable proportion. We'll manage the teams. We'll compensate them well, but there'll be lots of profitability, and people have bought that story. So I think a lot of smaller organizations who aspire to be like a Blackstone or an Apollo, have tried to get people to buy into this story. And I think what Bill Ackman was trying to do was some version of that, but just to say, I'm going to build an enterprise here. Pershing Square is going to be a standalone business. It's going to have enterprise value, and you're gonna measure that based on the assets that I manage, and it's going to be much greater than what I manage today. And I think he manages roughly $10 billion today, but he thought he was gonna raise another $25 billion in this IPO and then in very short order, be at $50 And so he got people to invest in that business on that premise. And I think folks put in around $1 billion, and they valued that entity at $10 billion. And so he tried to go and raise his fund. He thought it was gonna be $25 billion. And it turned out I thought it was $2 billion, but Friedberg, you just said it's less than $1 Chamath Palihapitiya (01:09:52): I didn't I did I I guess, or around $1 billion. I just heard that I'm just hearing that from you for the first time. So I guess what is the takeaway? David Friedberg (01:10:00): Like, Chamath, real quick, you know, you know, this this was a this was a closed-end fund. He was trying to raise. Chamath Palihapitiya (01:10:05): No. But he's I think he's also said that Pershing Square eventually has a path to go public. That's how he sold the billion of equity at $10 billion. In the master LP. David Friedberg (01:10:13): Yeah. But this IPO was just for a fund. It was just for sure. Chamath Palihapitiya (01:10:16): There was there it was the IPO of the fund, and then David Friedberg (01:10:18): they were planning afterwards the IPO. They were planning afterwards. Yeah. Yes. Which he didn't do. Chamath Palihapitiya (01:10:22): My only point was that the fund was basically, it's launching a fund, and then the goal is not the fund itself. The goal is to buttress the underlying logic to take the whole thing public, the manager. Okay. Okay. Speaker 3 (01:10:34): And so Chamath Palihapitiya (01:10:34): and that's what I mean by taking a company public and finance is next to impossible. Yeah. So the whole point is, like, what are these businesses in the business of doing? They're in the business of making bets. The problem is that those bets are short-term anomalous events. Sometimes they work. Sometimes they don't work. And the problem with that is that investors who are trying to underwrite 20 or 30 years of returns don't know how that's predictable over that period of time. Like for example, you're genetically engineering all kinds of produce that we are going to ingest. If that stuff works at scale, you will have built an enterprise that theoretically has the potential, unless it's disrupted by something else, to make revenue for 20 or 30 years. So people can underwrite that. Google makes a search engine. It's gonna last for 20 or 30 years. Facebook makes a social network. It can last for 20 or 30 years. The business of making bets is typically something that can only be measured in days or weeks, maybe months at best. And so I think Speaker 3 (01:11:34): what he ran into was that realization. It's very hard to get people Chamath Palihapitiya (01:11:34): to value an institution in this way. And so the thing did not work. He'll go back and he'll retool. Speaker 3 (01:11:47): The thing that I give Bill Ackman an enormous amount of credit for is he is one of the most resilient individuals I've Chamath Palihapitiya (01:11:48): ever seen in high finance, but generally as a businessperson. This guy has surfed some really big waves. He's landed some really good sets. He's also gotten crushed a few times, and the guy just keeps coming back. And he seems to be getting more and more refined and capable as a businessperson. So, you know, he'll probably figure out a way. This is not the first time he's publicly dealt with things that have not worked. But I think it just goes to show you that in finance, these entities that try to sell a piece of the quote-unquote general partner as a company. I just think that it's, frankly, that it doesn't work. And this is just, you know, an example, yet another example that there's not a lot of equity value in these businesses. David Friedberg (01:12:43): Sacks, some Speaker 3 (01:12:45): reports indicate that investors pulled out of the Pershing Square IPO because of the current David Friedberg (01:12:45): market conditions that a lot of market indices have stormed higher and that there is now less Speaker 3 (01:12:58): upside, and it's not a great time to be Chamath Palihapitiya (01:12:58): entering the equity markets. Other reports indicate that investors lost interest in Ackman's fund David Friedberg (01:13:08): because of his activity on X, or Twitter. Do you have a point of view? Do you think that folks pulled out? Investors have pulled out? You're obviously a fund manager who is very active and opinionated on X. Have your device orders? Like, what, you know, do you think has this affected your relationship with raising capital, if you're willing to talk about it, or maybe just comment on the Ackman issue that he ran into? Why did this fail? David Sacks (01:13:32): I just don't know. I honestly haven't followed his IPO process at all. Okay. I would say that the market we have right now is not the best it's been, but it's also not the worst. So I'm always reluctant to blame macro conditions without having any more specific explanation. David Friedberg (01:13:49): Give a point of view on investors having an issue with Ackman because of his outspokenness on various social and political issues. David Sacks (01:13:57): I can't imagine. No. I can't imagine. That's right. Chamath Palihapitiya (01:13:59): I don't think so. Investors care about making money. And Bill Ackman's a moneymaker. Like, that's undeniable. The guy takes some losses, but his wins are way bigger than his losses, and he is a Speaker 3 (01:14:10): proven moneymaker. The problem is that I think the way in which he was trying to monetize the business is just a hard thing to Chamath Palihapitiya (01:14:18): do. You have to have an organization of 100, approaching thousands of Speaker 3 (01:14:20): people that are raising all manner of funds, and those funds just deliver very consistent returns. David Friedberg (01:14:21): Not great, but they never lose money. Chamath Palihapitiya (01:14:32): And that's how you get towards a trillion dollars, and that's how you make it a company and not a great hedge fund. David Sacks (01:14:38): Yeah. Let me also just say, I think he's very thoughtful on Twitter. You know, I've gotten into some disagreements with him on Twitter. Other things I've agreed with, but overall, I think he makes a strong case for himself. I haven't heard him say anything out of bounds on Twitter, whether you agree with it or not. So I can't imagine that's a problem. David Friedberg (01:14:57): Some people would disagree. They think he's had a lot of comments on what gives them, as he would call it, DEI topics and Donald Trump. About that, but David Sacks (01:15:06): I think the vast majority of the country agrees that woke has jumped the shark. David Friedberg (01:15:11): Yeah. But I think some people highlight. David Sacks (01:15:13): If woke is so great, why is Kamala Harris trying to distance herself from every previous comment she's ever made about wokeism or DEI. David Friedberg (01:15:21): The point is more about, like, what we Speaker 3 (01:15:22): talked about earlier, which is kind of having an authentic voice and speaking what you believe and speaking what your opinion is David Friedberg (01:15:22): versus remaining buttoned up and not speaking what you believe and toeing the line, Chamath Palihapitiya (01:15:33): he's in the only industry where his performance is Speaker 3 (01:15:34): measurable every day in precision. Right. So what I David Friedberg (01:15:34): would say is it's irrelevant what he Chamath Palihapitiya (01:15:34): says on Twitter. Meaning, the quality Speaker 3 (01:15:46): of these decisions are independent of what he says because they're measurable and they are not something you can gain. Chamath Palihapitiya (01:15:46): And the reality is that over the last few years, particularly starting in COVID, he has gotten better and better, and he's played a very good hand. Speaker 3 (01:16:02): I think he's an exceptional risk manager, and he's timed it. And so the people that say that to you, to be very honest, are somewhat they're Chamath Palihapitiya (01:16:12): They're betraying their lack of financial sophistication. David Sacks (01:16:14): Yeah. And actually, can I go further? And I actually think that Ackman's presence on Twitter is a huge positive for him. It's an asset because he has a gigantic followership. And he's able to speak directly to his audience in the way that we do. And I think the reason why people say these things is because they don't have a direct strategy, and so they wanna basically bat him out people who do. But, again, if you don't go direct to your audience, then you have to go through the media and then they get to define you. Chamath Palihapitiya (01:16:43): And it creates ambiguity. Exactly. David Sacks (01:16:46): So I think the fact that he's got, what, like, 1 million plus followers and you know, everything he puts out gets tens of thousands of likes. It's a huge positive. Chamath Palihapitiya (01:16:55): Huge positive. And I think that the part of his business that Speaker 3 (01:16:58): he hasn't gone back to, which if he does in this chapter of his Chamath Palihapitiya (01:16:58): career with the following that he has, is the Speaker 3 (01:17:08): activism part. And I think there are two people who I think are incredible at this. And where both the written and the spoken word, they have such a Chamath Palihapitiya (01:17:09): mastery of Ackman is one. Dan Loeb is the other. And I think that, you know, in this world where you have the ability to go direct in a way that you've never Speaker 3 (01:17:27): had before is actually the realm of a different form of Chamath Palihapitiya (01:17:27): activism that I think could be extremely economically rewarding and valuable in society. Alright, gentlemen. This has been a great episode of the Speaker 3 (01:17:42): All-In Pod. We missed our comedian in residence, Jason David Friedberg (01:17:42): Calacanis, Nostradamus, Nostril Anis. We miss him. We wish him well, speedy recovery. This has Speaker 3 (01:17:54): been an episode without the usual humor and flamboyancy that Chamath Palihapitiya (01:17:54): we've all come to know and love, Speaker 3 (01:17:55): but I think it was Chamath Palihapitiya (01:17:55): great to chat this David Friedberg (01:18:03): afternoon. And we will see you all next week. Bye-bye. Speaker 3 (01:18:08): Love you, boys. Bye. I got you. We'll let your winners ride. Rainman, David Sacks. And it said we Chamath Palihapitiya (01:18:09): open Speaker 3 (01:18:20): sits to the fans, and they've just gone crazy lately. Driveway checks. We should only just get a room and just have one big huge orgy, because they're all just useless. It's like this, like, sexual tension, and we just need to release them out. David Sacks (01:18:52): Flirt your feet. What? Speaker 3 (01:18:55): Where did you get Murkey's our back?